United Wholesale Mortgage will start working directly with appraisers, something that is not common for the broker-facing sector, which normally uses appraisal management companies as a middleman.

UWM will roll out the program it has been piloting, Appraisal Direct, nationwide on Oct. 1. It is adding 100-plus people to work with the program and will still provide the option to order appraisals through AMCs.

“AMCs are great, you can still work with them,” UWM President and CEO Mat Ishbia said. “They have a lot of value in our industry, but we are offering a new option.”

While Ishbia touted the efficiency of the program, Kimber White, the president of the National Association of Mortgage Brokers questioned whether the wholesale lender was offering “an emotional response to a more complex problem in our industry.” Even before COVID, the appraiser shortage affected the efficient functioning of the lending process.

“I just don’t see this from NAMB’s perspective as a solution to the appraisal issue,” said White. “I think it may be immediate for them but isn’t it better for all of us to work together collectively, and find a solution for our entire industry.”

White said the move was reminiscent of past missteps. “Is this really how we want to go, to let every wholesale lender get into the appraisal business? We know how that worked out for us before,” he said, pointing to the myriad of problems with valuations during the housing boom and subsequent crash that led to the creation of the Home Valuation Code of Conduct. That in turn, led lenders to increase the use of AMCs as a go-between for appraisers and mortgage brokers.

The Appraisal Institute, the country’s largest professional association of real estate appraisers, has always cast a wary eye on the use of AMCs. More recently, the debate has been focused on whether new technologies will assist human appraisers or replace them.

“Our organization supports innovation in the lending industry, and any progress that further evolves client relationships toward using the services of highly qualified designated appraisers is a win for consumers and the industry as a whole,” said AI President Rodman Schley in a statement. “We are hearing about more situations like this, and other innovations, including internal staff models and use of technology platforms or ‘portals,’ that help lenders manage the appraisal function with quality top of mind.”

In particular, AMC use has been a flash point for appraisers, especially when it comes to fees, both for the amount and the timeliness of the payment.

Under UWM’s Appraisal Direct, 100% of the fee that the company collects will go to the appraiser, and they’re going to get paid the next day instead of waiting for the 15th of the month or two weeks later, or even as much as 45 days later, Ishbia said

“And so when the appraiser gets paid more, what are they going to want to do?” he said. “They’re going to want more of those orders because they get paid top dollar and hopefully will do it faster with better quality so it’s a real big win for the broker channel, because nobody does it this way in wholesale.”

White agreed that a standalone wholesaler with its own panel was not common, but he added that some banks and retail lenders have their own panels. He doesn’t believe they are getting any better turn times on the reports than they would have if they worked through an AMC.

“I wish them well, I just think that there’s a better way to talk about it and come to the table together,” said White.





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